Presented below is a composite list of Art. 35 cases reporting UNCITRAL Digest cases and other Art. 35 cases. All cases are listed in chronological sequence, commencing with the most recent. Asterisks identify the UNCITRAL Digest cases, commencing with the 15 October 2002 citation reported below. Cases are coded to the UNCITRAL Thesaurus.

English texts and full-text English translations of cases are provided as indicated. In most instances researchers can also access UNCITRAL abstracts and link to Unilex abstracts and full-text original-language case texts sourced from Internet websites and other data, including commentaries by scholars to the extent available.

(1) The seller must deliver goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract.

(2) Except where the parties have
agreed otherwise, the goods do not conform with the contract unless they:

(a) are fit for the purposes
for which goods of the same description would ordinarily be used;
(b) are fit for any
particular purpose expressly or impliedly made known to the seller at the time
of the conclusion of the contract, except where the circumstances show that the
buyer did not rely, or that it was unreasonable for him to rely, on the
seller’s skill and judgement;
(c) possess the qualities
of goods which the seller has held out to the buyer as a sample or model;
(d) are contained or
packaged in the manner usual for such goods or, where there is no such manner,
in a manner adequate to preserve and protect the goods.

(3) The seller is not liable
under subparagraphs (a) to (d) of the preceding paragraph for any
lack of conformity of the goods if at the time of the conclusion of the
contract the buyer knew or could not have been unaware of such lack of
conformity.

DIGEST OF ARTICLE 35 CASE LAW

Introduction

1. Article 35 of the CISG defines standards for determining whether goods delivered by the seller conform to the
contract in terms of type, quantity, quality, and packaging, thereby defining
the seller's obligations with respect to these crucial aspects of contractual
performance. Two courts have stated that the unitary notion of conformity
defined in article 35 displaces the concepts of "warranty" found in many
domestic laws.[1]

2. In general, a failure by the seller to deliver goods that meet the applicable requirements of article 35
constitutes a breach of the seller's obligations,[2]
although it has been stated that a failure of goods to conform to the contract
is not a breach if the non-conforming goods are equal in value and utility to
conforming goods.[3] A seller's
breach of its obligations under article 35, furthermore, can in proper
circumstances rise to the level of a fundamental breach of contract as defined
in article 25 of the Convention, and thus justify the buyer in avoiding the
contract under article 49(1) of the Convention.[4]

Article 35(1)

3. Article 35(1) requires a seller to deliver goods that meet the specifications of the contract in terms of
description, quality, quantity and packaging. Thus it has been found that a
shipment of raw plastic that contained a lower percentage of a particular
substance than that specified in the contract, and which as a result produced
window blinds that did not effectively shade sunlight, did not conform to the
contract, and the seller had therefore breached its obligations.[5] It has also been found that a shipment of goods containing less than the
quantity specified in the contract lacks conformity under article 35(1), with
the court noting that a lack of conformity comprises both a lack of quality and
a lack of quantity.[6] A used car
that had been licensed two years earlier than indicated in the car's documents
and whose odometer did not state the full mileage on the car was found to be
non-conforming under article 35(1).[7]
On the other hand, one court has concluded that there was no violation of
article 35(1) when the seller delivered shellfish containing a high level of
cadmium because the parties did not specify a maximum cadmium level in their
agreement.[8]

4. In ascertaining, for purposes of
article 35(1), whether the contract requires goods of a particular quantity,
quality or description, or requires that the goods be contained or packaged in
a particular manner, one must refer to general rules for determining the
content of the parties' agreement.[9]
In this connection, one court, on appeal of the decision concerning shellfish
with high cadmium levels mentioned in the previous paragraph, found that the
seller had not impliedly agreed to comply with recommended (but not legally
mandatory) domestic standards for cadmium in shellfish existing in the buyer's
country.[10] The court
reasoned that the mere fact the seller was to deliver the shellfish to a
storage facility located in the buyer's country did not constitute an implied
agreement under article 35(1) to meet the standards for resalability in the
buyer's country or to comply with public law provisions of the buyer's country
governing resalability.[11]

Article 35(2): Overview

5. Article 35(2) states standards relating to the goods' quality, function and packaging that, while not
mandatory, are presumed to be a part of sales contracts. In other words, these
standards are implied terms that bind the seller even without affirmative
agreement thereto. If the parties do not wish these standards to apply to their
contract, they can (in the words of art. 35) "agree[...] otherwise."[12]
Unless the parties exercise their autonomous power to contract out the
standards of article 35(2), they are bound by them.[13]
An arbitral tribunal has found that an agreement as to the general quality of
goods did not derogate from article 35(2) if the agreement contained only
positive terms concerning the qualities that the goods would possess, and not
negative terms relieving the seller of responsibilities.[14]
One court applied domestic law to invalidate a particular contract clause that
attempted to exclude the seller's liability for a lack of conformity in the goods:
the court held that the question of the validity of such a clause is an issue
beyond the scope of the CISG, and is governed by the domestic law applicable
under private international law rules.[15]

6. Article 35(2) is comprised of four
subparts. Two of the subparts (art. 35(2)(a) and art. 35(2)(d)) apply to all
contracts unless the parties have agreed otherwise. The other two subparts
(art. 35(2)(b) and art. 35(2)(c)) are triggered only if certain factual
predicates are present. The standards stated in these subparts are cumulative –
that is, the goods do not conform to the contract unless they meet the
standards of all applicable subparts.

Article 35(2)(a)

7. Article 35(2)(a) requires the seller
to deliver goods "fit for the purposes for which goods of the same description
would ordinarily be used." This standard was found to be violated when the
seller delivered a refrigeration unit that broke down soon after it was first
put into operation.[16]
It was also found violated when the seller delivered wine that had been diluted with 9% water, causing domestic authorities to seize and destroy the wine,[17]
and when the seller delivered chaptalized wine.[18]
It was also found to be violated where the seller substituted a different
component in a machine without notifying the buyer and without giving the buyer
proper instructions for installation, and as a result the machine failed after
three years of use, thus disappointing the buyer's expectation for "long,
continuous operation of the [machine] without failure."[19]

8. The standard of article 35(2)(a),
however, requires only that the goods be fit for the purposes for which they
are ordinarily used. It does not require that the goods be perfect or flawless,
unless perfection is required for the goods to fulfil their ordinary purposes.[20] One court has raised but not resolved the issue of whether article 35(2)(a) requires goods of average quality, or goods of merely "marketable" quality.[21]

9. Several decisions have discussed whether conformity with article 35(2)(a) is determined
by reference to the quality standards prevailing in the buyer's jurisdiction.
According to one decision, the fact that the seller is to deliver goods to a
particular jurisdiction and can infer that they will be marketed there is not
sufficient to impose the standards of the importing jurisdiction in determining
suitability for ordinary purposes under article 35(2)(a).[22]
Thus the fact that mussels purchased and delivered to the buyer's country
contained cadmium levels exceeding the recommendations of the buyer's country's
health regulations did not establish that the mussels failed to conform to the
contract under article 35(2)(a).[23]
The court indicated that the standards in the importing jurisdiction would have
applied if the same standards existed in the seller's jurisdiction, or if the
buyer had pointed out the standards to the seller and relied on the seller's
expertise.[24] The court
raised but did not determine the question whether the seller would be
responsible for complying with public law provisions of the importing country
if the seller knew or should have known of those provisions because of "special
circumstances" – e.g., if the seller maintained a branch in the importing
country, had a long-standing business connection with the buyer, often exported into the buyer's country, or promoted its products in the importing country.[25]
A court from a different country, citing the aforementioned decision, has
upheld an arbitral award finding a seller in violation of article 35(2)(a)
because it delivered medical devices that failed to meet safety regulations of
the buyer's jurisdiction:[26]
the court concluded that the arbitration panel acted properly in finding that
the seller should have been aware of and was bound by the buyer's country's
regulations because of "special circumstances" within the meaning of the
opinion of the court that rendered the aforementioned decision. A different
court has found that a seller of cheese was required to comply with the buyer's
country's standards because it had had dealings with the buyer for several
months, and therefore must have known that the cheese was destined for the
market in the buyer's country;[27]
the seller, therefore, violated its obligations under CISG article 35 when it
delivered cheese that did not have its composition marked on the packaging, as
required by the buyer's country's marketing regulations.

Article 35(2)(b)

10. Article 35(2)(b) requires that the
goods be fit for "any particular purpose expressly or impliedly made known to
the seller at the time of the conclusion of the contract." The article 35(2)(b)
obligation arises only if one or more particular purposes were revealed to the
seller by the time the contract was concluded. In addition, the requirements of
article 35(2)(b) do not apply if "the circumstances show that the buyer did not
rely, or that it was unreasonable for him to rely, on the seller's skill and
judgement." With regard to the latter reliance element, one court has stated
that in the usual case, a buyer cannot reasonably rely on the seller's
knowledge of the importing country's public law requirements or administrative
practices relating to the goods, unless the buyer pointed such requirements out
to the seller.[28] The court
therefore found that mussels with cadmium levels exceeding the recommendations
of German health regulations did not violate the requirements of article
35(2)(b) where there was no evidence that the buyer had mentioned the
regulations to the seller. By so holding, the court affirmed the decision of a
lower court that the seller had not violated article 35(2)(b) because there was
no evidence that the parties implicitly agreed to comply with the buyer's
country's health recommendations.[29]
On the other hand, one court has found that a seller violated article 35(2)(b)
when it delivered skin care products that did not maintain specified levels of
vitamin A throughout their shelf life.[30]
The court found that the buyer intended to purchase products with the specified
vitamin levels, that "the special purpose ... was known by the [seller] with
sufficient clarity," and that "the buyer counted on the seller's expertise in
terms of how the seller reaches the required vitamin A content and how the
required preservation is carried out."

Article 35(2)(c)

11. Article 35(2)(c) requires that, in
order to conform to the contract, goods must "possess the qualities of goods
which the seller has held out to the buyer as a sample or model." Several
courts have found that delivered goods violated this provision.[31]
Article 35(2)(c), by its terms, applies if the seller has held out a sample or
model to the buyer, unless the parties "have agreed otherwise." One court has
nevertheless indicated that the goods must conform to a model only if there is
an express agreement in the contract that the goods will do so.[32]
On the other hand, it has been held that the section will apply if it is the
buyer rather than the seller that has provided the model, provided that the
parties agreed that the goods should conform to the model.[33]

Article 35(2)(d)

12. Article 35(2)(d) supplements the
last clause of article 35(1), which requires that the goods be "contained or
packaged in the manner required by the contract." Several cases have found that
improperly packaged goods failed to conform to the contract under article
35(2)(d). Where a seller sold cheese that it knew would be resold in the
buyer's country, and the cheese was delivered in packaging that did not comply
with that country's food labelling regulations, the goods were deemed
non-conforming under article 35(2)(d).[34]
In another case, a seller of canned fruit was found to have violated article 35
where the containers were not adequate to prevent the contents from
deteriorating after shipment.[35]

Article 35(3)

13. Article 35(3) relieves the seller of responsibility for a lack of conformity under article 35(2) to the extent that the buyer "knew or could not have been unaware" of the non-conformity at the time the contract was concluded.[36] Under this provision, a buyer has been held to have assumed the risk of defects in a used bulldozer that the buyer inspected and tested before purchasing.[37] One court has stated that, under article 35(3), a buyer who elects to purchase goods despite an obvious lack of conformity must accept the goods "as is."[38]
The rule of article 35(3), however, is not without limits. Where a seller knew
that a used car had been licensed two years earlier than indicated in the car's
documents and knew that the odometer understated the car's actual mileage but
did not disclose these facts to the buyer, the seller was liable for the lack
of conformity even if the buyer (itself a used car dealer) should have detected
the problems.[39] Citing
articles 40 and 7(1), the court found that the Convention contains a general
principle favoring even a very negligent buyer over a fraudulent seller.

Burden of proof

14. A number of decisions have discussed who bears the burden of proving that goods fail to conform to the contract
under article 35. One court has twice indicated that the seller bears that
burden.[40]
On the other hand, several tribunals have concluded that the buyer bears the
burden of proving lack of conformity, although the decisions adopt different
theories to reach that result. For example, after noting that the CISG does not
expressly address the burden of proof issue, one arbitral tribunal applied
domestic law to allocate the burden to the buyer as the party alleging a lack
of conformity.[41] Other
courts have concluded that the Convention itself, although it does not
expressly answer the burden of proof question, contains a general principle
that the party who is asserting or affirming a fact bears the burden of proving
it, resulting in an allocation of the burden to a buyer who asserts that goods
did not conform to the contract.[42]
Some decisions suggest that the burden of proof varies with the context. Thus,
one court has stated that the buyer bears the burden of proving a lack of
conformity if it has taken delivery of the goods without giving immediate
notice of non-conformity.[43]
Similarly, another court has indicated that the seller bears the burden of
proving that goods were conforming at the time risk of loss passed, but the
buyer bears the burden of proving a lack of conformity after the risk shifted
if it has accepted the goods without immediately notifying the seller of
defects.[44]

Evidence of lack of conformity

15. Several decisions address
evidentiary issues relating to a lack of conformity under article 35. Direct
evidence that the standards of article 35 were violated has been adduced and
accepted by courts in several instances. Thus a showing that delivered wine had
been seized and destroyed by authorities in the buyer's country because it had
been diluted with water was accepted by the court as establishing that the wine
did not conform with the contract for sale.[45]
Similarly, one court has found that, once the buyer established that a
refrigeration unit had broken down shortly after it was first put into
operation, the seller was presumed to have violated article 35(2)(a) and thus bore the burden
of showing it was not responsible for the defects.[46]
Expert opinion has also been accepted as establishing a lack of conformity,[47]
although the results of an investigation into the quality of the goods have
been held insufficient to establish a lack of conformity where the buyer
ignored a trade usage requiring that the seller be permitted to be present at
such investigations.[48]
On the other hand, it has been found that the early failure of a substituted
part in a machine did not by itself establish that the machine was not in
conformity with the contract, since the failure might have been due to improper
installation.[49]
Furthermore, a buyer's failure to complain of obvious defects at the time the
goods were received has been taken as affirmative evidence that the goods
conformed to the contract.[50]
In another case, deliveries of allegedly non-conforming chemicals had been
mixed with earlier deliveries
of chemicals; thus, even though the buyer showed that glass produced with the
chemicals was defective, it could not differentiate which deliveries were the source of the defective chemicals; and since the time to give notice of non-conformity for the earlier deliveries had expired, the buyer failed to prove a lack of conformity:[51]
Finally, it has been found that a seller's offer to remedy any defects in the
goods did not constitute an admission that the goods lacked conformity.[52]

Jurisdictional issues

16. For purposes of determining
jurisdiction under article 5(1) of the Brussels Convention, several courts have
concluded that the conformity obligation imposed on the seller by CISG article
35 is not independent of the obligation to deliver the goods, and both
obligations are performed at the same place.[53]

FOOTNOTES

* The present text was prepared using the full text of the decisions cited in the Case Law on UNCITRAL Texts (CLOUT) abstracts and other citations listed in the footnotes. The abstracts are intended to serve only as summaries of the underlying decisions and may not reflect all the points made in the digest. Readers are advised to consult the full texts of the listed court and arbitral decisions rather than relying solely on the CLOUT abstracts.

[Citations to cisgw3 case presentations have been substituted [in brackets] for the case citations provided in the UNCITRAL Digest. This substitution has been made to facilitate online access to CLOUT abstracts, original texts of court and arbitral decisions, and full text English translations of these texts (available in most but not all cases). For citations UNCITRAL had used, go to <http://www.uncitral.org/english/clout/digest_cisg_e.htm>.]

2.See, e.g., CLOUT case No. 123 [GERMANYBundesgerichtshof [Supreme Court] 8 March 1995, available online at <http://cisgw3.law.pace.edu/cases/950308g3.html>] (see full text of the decision), (stating that a fundamental breach of contract "can be caused by a delivery of goods that do not conform with the contract") [English translation by Alston & Bird];
[GERMANYLandgericht [District Court] Paderborn 25 June 1996, available online at <http://cisgw3.law.pace.edu/cases/960625g1.html>] (stating that the seller had breached its obligations by delivering goods that failed to conform to the technical specifications of the contract) [English translation by Jarno Varno, translation edited by Ruth M. Janal].

4. CLOUT case No. 123 [GERMANYBundesgerichtshof [Supreme Court] 8 March 1995, available online at <http://cisgw3.law.pace.edu/cases/950308g3.html>] (see full text of the decision) [supra note 2];
CLOUT case No. 79 [GERMANYOberlandesgericht [Appellate Court] Frankfurt 18 January 1994, available online at <http://cisgw3.law.pace.edu/cases/940118g1.html>] [English translation by Journal of Law and Commerce].
See also [ITALYTribunale [District Court] Busto Arsizio 13 December 2001, available online at <http://cisgw3.law.pace.edu/cases/011213i3.html>] (delivery of a machine totally unfit for the particular use which was made known to the seller and which was incapible of reaching the promised production level represented a "serious and fundamental" breach of the contract, since the promised production level had been an essential condition for the conclusion of the contract, and therefore forming the basis for termination).

9. Such general rules for determining the contents of the parties' agreement would include the general standards in the CISG relating to the meaning and contents of a contract for sale, including article 8 (standards for determining a party's intent) and article 9 (usages and practices to which the parties are bound).

12. The parties' power to contract out of the implied standards of article 35(2) (i.e., to agree otherwise) is a specific
application of the parties' power under article 6 to "derogate from or vary the
effect of any of [the Convention's] provisions." See CLOUT case No. 229
[GERMANYBundesgerichtshof [Supreme Court] 4 December 1996, available online at <http://cisgw3.law.pace.edu/cases/961204g1.html>] [English translation by Alston & Bird]. ("If the [buyer] has warranty claims against the seller – and of what kind – primarily depends upon the
warranty terms and conditions of [seller], which became part of the contract.
They have priority over the CISG provisions (CISG Art. 6).") (see full text of
the decision).

13. One court has held that machinery was sold "as is" – in effect, without the protections of article 35(2)(a) – because it was second-hand, but the court of appeal chose not to rely on this approach and instead affirmed this portion of the lower court decision on other grounds. See [GERMANYOberlandesgericht [Appellate Court] Köln 8 January 1997, available online at <http://cisgw3.law.pace.edu/cases/970108g1.html>] [English translation by Ruth M. Janal, translation edited by Camilla Baasch Andersen], affirming in relevant part
[GERMANYLandgericht [District Court] Aachen 19 April 1996, available online at <http://cisgw3.law.pace.edu/cases/960419g1.html>].

15. CLOUT case No. 168 [GERMANYOberlandesgericht [Appellate Court] Köln 21 May 1996, available online at <http://cisgw3.law.pace.edu/cases/960521g1.html>] [English translation by Dr. Peter Feuerstein, translation edited by Chantal Niggemann]. See also
[UNITED STATESSupermicro Computer, Inc. v. Digitechnic, S.A. Federal District Court [California] 30 January 2001, available online at <http://cisgw3.law.pace.edu/cases/010130u1.html>] wherein a United States District Court declined to hear a dispute that was already subject to
litigation in France because resolving the matter would require the court to
determine the validity of a warranty disclaimer clause under the CISG (145 F.
Supp. 2d at 1151).

20. [ICCCourt of Arbitration, case No. 8247 of June 1996, available online at <http://cisgw3.law.pace.edu/cases/968247i1.html>] (microcrystaline chemicals that had solidified but could easily be re-transformed into crystals did not fail to conform to the contract);
CLOUT case No. 252 [SWITZERLANDHandelsgericht [Commercial Court] Zürich 21 September 1998, available online at <http://cisgw3.law.pace.edu/cases/980921s1.html>] (one misplaced line of text, which did not
impede the legibility of the text, did not render an art exhibition catalogue
non-conforming);
CLOUT case No. 341 [CANADALa San Giuseppe v. Forti Moulding Ltd. [Ontario Superior Court of Justice] 31 August 1999, available online at <http://cisgw3.law.pace.edu/cases/990831c4.html>] (shipments containing a small percentage of defective picture frame mouldings did not fail to conform to the contract when the evidence indicated that shipments from any supplier would include some defective mouldings) (see full text of the decision).

21. CLOUT case No. 123 [GERMANYBundesgerichtshof [Supreme Court] 8 March 1995, available online at <http://cisgw3.law.pace.edu/cases/950308g3.html>] (see full text of the decision). One court has stated that, to comply with article 35(2)(a), goods must be of average quality, and not merely marketable; see [GERMANYLandgericht [District Court] Berlin 15 September 1994, available online at <http://cisgw3.law.pace.edu/cases/940915g1.html>] [English translation by Martin Eimer, translation edited by Ruth M. Janal].
Compare [NETHERLANDSArbitration Institute case no. 2319 of 15 October 2002, available online at <http://cisgw3.law.pace.edu/cases/021015n1.html>] (rejecting both average quality and merchantability tests, and applying a "reasonable quality" standard) [English text].

22. CLOUT case No. 123 [GERMANYBundesgerichtshof [Supreme Court] 8 March 1995, available online at <http://cisgw3.law.pace.edu/cases/950308g3.html>] [supra note 2] ("a foreign seller can simply not be required to know the not easily determinable public law provisions and/or administrative practices of the country to which he exports, and ... the purchaser, therefore, cannot rationally rely upon such knowledge of the seller, but rather, the buyer can be expected to have such expert knowledge of the conditions in his own country or in the place of destination, as determined by him, and, therefore, he can be expected to inform the seller accordingly"). The court raised but did not resolve the issue of whether goods must meet the standards of the seller's own jurisdiction in order to comply with article 35(2)(a) (see full text of the decision).

23.Id. Compare CLOUT case No. 343
[GERMANYLandgericht [District Court] Darmstadt 9 May 2000, available online at <http://cisgw3.law.pace.edu/cases/000509g1.html>] [English translation by Ruth M. Janal, translation edited by Camilla Baasch Andersen], where a Swiss purchaser of video recorders complained that the German seller had only supplied instruction booklets in German and not in the other languages spoken in Switzerland. The court rejected the argument because the recorders had not been produced specially for the Swiss market and the buyer had failed to stipulate for instruction booklets in other languages.

24. In a later decision involving vine wax that failed to protect vines grafted using the wax, the German Supreme Court found that the wax did not meet the requirements of article 35(2)(a) because it "did not meet the industry standards – of which both parties were aware and which both parties applied...". CLOUT case No. 272 [GERMANYOberlandesgericht [Appellate Court] Zweibrücken 31 March 1998, available online at <http://cisgw3.law.pace.edu/cases/980331g1.html>] (see full text of the decision).

25. One court has concluded that, in the following circumstances, a Spanish seller of pepper agreed that the goods had to comply with German food safety laws: the seller had a long-standing business relationship with the German buyer; the seller regularly exported into Germany; and in a previous contract with the buyer the seller had agreed to special procedures for ensuring compliance with German food safety laws;
[GERMANYLandgericht [Appellate Court] Ellwangen 21 August 1995, available online at <http://cisgw3.law.pace.edu/cases/950821g2.html>] [English translation by Alston & Bird]. The court, citing article 35(1), found that pepper products containing ethylene oxide at levels exceeding that permitted by German food safety laws did not conform to the contract; it therefore ruled in favor of the buyer, who had argued (presumably on the basis of article 35(2)(a)) that the pepper products "were not fit for the purposes for which the goods would ordinarily be used and not fit to be sold in Germany."

31. CLOUT case No. 79 [GERMANYOberlandesgericht [Appellate Court] Frankfurt 18 January 1994, available online at <http://cisgw3.law.pace.edu/cases/940118g1.html>] (holding that the goods (shoes) failed to conform to a sample supplied by the seller, but that the lack of conformity was not shown to be a fundamental breach) (see full text of the decision); CLOUT case No. 138 [UNITED STATESDelchi Carrier v. Rotorex, [Federal Appellate Court] [2nd Circuit] 6 December 1995, available online at <http://cisgw3.law.pace.edu/cases/951206u1.html>] (finding that air conditioner compressors delivered by the seller did not conform to the contract, and that such lack of conformity constituted a fundamental breach: "The agreement between Delchi and Rotorex was based upon a sample compressor supplied by Rotorex and upon written specifications regarding cooling capacity and power consumption ... . The president of Rotorex ... conceded in a May 17, 1988 letter to Delchi that the compressors supplied were less efficient than the sample ... .") (see full text of the decision).

36. Note that article 35(3) only relieves the seller of responsibility for non-conformity under article 35(2)(a)-(d). A lack of conformity under article 35(1) (requiring the goods to be of "the quantity, quality and description required by the contract") is not subject to the rule of article 35(3). Nevertheless, a buyer's awareness of defects at the time the contract is concluded should presumably be taken into account in determining what the parties' agreement requires as to the quality of the goods. Secretariat Commentary to (then) Article 33 of the Convention, p. 32, para. 14.

37. CLOUT case No. 219 [SWITZERLANDTribunal Cantonal [Appellate Court] Valais 28 October 1997, available online at <http://cisgw3.law.pace.edu/cases/971028s1.html>]. After the buyer inspected the bulldozer, the parties agreed that the seller would replace three specific defective parts. The seller replaced the parts before delivering the machine, but the buyer then complained of other defects. (see full text of the decision)

41. CLOUT case No. 103 [ICCCourt of Arbitration, case No. 6653 of 26 March 1993, available online at <http://cisgw3.law.pace.edu/cases/936653i1.html>]. A Swiss court has acknowledged the view that the burden of proving a lack of conformity should be allocated by applying domestic law, but it neither adopted nor rejected this approach because the contrary view led to the same result (buyer bore the burden).
CLOUT case No. 253 [SWITZERLANDTribunale d'appello [Appellate Court] Lugano, Cantone del Ticino 15 January 1998, available online at <http://cisgw3.law.pace.edu/cases/980115s1.html>] [English translation by Charles Sant 'Elia, translation edited by Angela Maria Romito].

42. CLOUT case No. 378 [ITALYTribunale [District Court] Vigevano 12 July 2000, available online at <http://cisgw3.law.pace.edu/cases/000712i3.html>] [English translation by Journal of Law and Commerce] (containing an extended discussion of the issue). To the same general effect, see
CLOUT case No. 97 [SWITZERLANDHandelsgericht [Commercial Court] Zürich 9 September 1993, available online at <http://cisgw3.law.pace.edu/cases/930909s1.html>]. One court has noted the view that the Convention contains a general principle allocating the burden to the buyer, but it neither adopted nor rejected this approach because the contrary view led to the same result (buyer bore the burden).
CLOUT case No. 253 [SWITZERLANDTribunal Cantonal [Appellate Court] Lugano, Cantone del Ticino 15 January 1998, available online at <http://cisgw3.law.pace.edu/cases/980115s1.html>] [supra note 41]; see also
[NETHERLANDSArbitration Institute case no. 2319 of 15 October 2002, available online at <http://cisgw3.law.pace.edu/cases/021015n1.html>]
[supra note 21]. Without expressly discussing the issue, several decisions appear to have impliedly adopted the view that the CISG allocated the burden of proving lack of conformity to the buyer. See CLOUT case No. 107 [AUSTRIAOberlandesgericht [Appellate Court] Innsbruck 1 July 1994, available online at <http://cisgw3.law.pace.edu/cases/940701a3.html>] [English translation by Ruth M. Janal, translation edited by Todd Fox] (buyer failed to prove that the goods did not conform to the contract); [GERMANYLandgericht [District Court] Düsseldorf 25 August 1994, available online at <http://cisgw3.law.pace.edu/cases/940825g1.html>] (buyer failed to prove lack of conformity).

43. CLOUT case No. 123 [GERMANYBundesgerichtshof [Supreme Court] 8 March 1995, available online at <http://cisgw3.law.pace.edu/cases/950308g3.html>] [supra note 2] (see full text of the decision). One court has found that, because it was shown that a refrigeration unit had broken down soon after it was first put into operation, the seller bore the burden of proving that it was not responsible for the defect.
CLOUT case No. 204 [FRANCECour d'appel [Appellate Court] Grenoble 15 May 1996, available online at <http://cisgw3.law.pace.edu/cases/960515f1.html>].

47. CLOUT case No. 50 [GERMANYLandgericht [District Court] Baden-Baden 14 August 1991, available online at <http://cisgw3.law.pace.edu/cases/910814g1.html>] [English translation by Journal of Law and Commerce] (see full text of the decision).
But see CLOUT case No. 378 [ITALYTribunale [District Court] Vigevano 12 July 2000, available online at <http://cisgw3.law.pace.edu/cases/000712i3.html>] [supra note 42] where the court rejected expert opinion evidence offered by the seller because under Italian civil procedure law only an expert appointed by the court can offer such an opinion (see full text of the decision). For cases in which courts appointed experts to evaluate the conformity of the goods,
see CLOUT case No. 123 [GERMANYBundesgerichtshof [Supreme Court] 8 March 1995, available online at <http://cisgw3.law.pace.edu/cases/950308g3.html>] [supra note 2] (reporting that the trial court had obtained an expert opinion of public health authorities on the cadmium level in mussels) (see full text of the decision);
CLOUT case No. 271 [GERMANYBundesgerichtshof [Supreme Court] 24 March 1999, available online at <http://cisgw3.law.pace.edu/cases/990324g1.html>] [English translation by Alston & Bird] (expert opinion that damage to vines was caused by defective vine wax) (see full text of the decision);
[BELGIUMRechtbank [District Court] Kortrijk 6 October 1997, available online at <http://cisgw3.law.pace.edu/cases/971006b1.html>] (appointing judicial expert to determine the conformity of yarn);
[BELGIUMRechtbank [District Court] Kortrijk 16 December 1996, available online at <http://cisgw3.law.pace.edu/cases/961216b1.html>].

The Interpretive Turn in International Sales Law:
An Analysis of Fifteen Years of CISG Jurisprudence

This section addresses the issues of the seller's obligation for non-conforming goods or for goods with
respect to which third parties assert claims. These obligations are found in Articles 35-44 of the
CISG. Article 35 states the basic obligation of the seller to deliver goods of the quantity, quality, and
description [550] required by the contract.[551] Unless the parties have otherwise agreed, this
obligation is not met unless the goods conform to any express warranties, or if there are no such
warranties, then certain implied warranties. The basic implied warranty requires that goods be "fit
for the purposes for which goods of the same description would ordinarily be used."[552] They
must be fit for the special purposes of the buyer, where that purpose is expressly or impliedly made
known to the seller at the time of the contract. The seller also warrants, unless otherwise agreed, that
the goods will be "contained or packaged in the usual manner for such goods or, where there is no
such manner, in a manner adequate to preserve and protect the goods."[553] The implied
warranties do not attach where circumstances indicate that the buyer did not rely on the seller's skill
or judgment or where the circumstances indicate that it would be unreasonable [page 390] for the
buyer to do so.[554] In addition, these warranties do not apply to non-conformities the buyer
knew about, or should have known, at the time of the conclusion of the contract.[555]

While Article 35 establishes the obligations of the seller with respect to conformity of the goods,
Article 36 governs the seller's liability for lack of conformity of the goods. It identifies the point of
reference for the non-conformity at the time the risk passes to the buyer.[556] The CISG permits
the seller to cure any lack of conformity if he has delivered the goods before the "date for delivery,"
which would be the date fixed in the contract for delivery or a date within the period for delivery
identified in the contract. The cure may include delivering missing parts or making up deficiencies
in quantity of the goods or replacing non-conforming goods with conforming goods. The cure must
not cause unreasonable inconvenience or unreasonable expense to the buyer.[557]

The seller's obligation to deliver conforming goods relates to the reciprocal obligations of the buyer
to examine the goods (Article 38) and to give notice to the seller of non-conformities (Article 39).
[558] Failure to do either within a practicable or reasonable time causes the buyer to lose the right
to rely on a lack of conformity of the goods, unless the seller knew, or should have been aware of the
non-conformity and failed to disclose the non-conformity to the buyer.[559]

Third-party claims pose special issues of lack of conformity. The seller is obligated under Article 41
to "deliver goods which are free from any right or claim of a third party unless the buyer agreed to
take the goods subject to that claim or right."[560] However, Article 41 does not apply to rights
or claims based on "industrial property or other intellectual property" rights.[561] In that case,
Article 42 governs the obligations of the seller. [page 391]

Article 42 requires generally that the seller deliver goods "which are free from any right or claim of
a third party based on industrial property or intellectual property, of which at the time of the
conclusion of the contract the seller knew or could not have been unaware." This obligation only
pertains to third-party claims [562] based on the law of the State in which the buyer has his place
of business or the law of the State where the goods will be resold or used, provided that the parties
contemplated their resale or use in that State at the time the contract was concluded.[563] This
obligation of the seller does not extend to cases where the buyer knew "or could not have been
unaware" of the right or claim, and the seller has complied with technical drawings, designs, formulae
or other such specifications that are the basis for the third party claim or right.[564] Unless he
has a reasonable excuse for failing to do so,[565] or unless the seller knew of the right or claim
of the third party and the nature of it, the buyer loses the right to rely on Article 41 or Article 42 if
he fails to give notice to the seller of the right or claim and the nature of it, within a reasonable time
after he has become, or ought to have become, aware of it.[566]

1. Warranties: Article 35

Article 35 is implicated in many commercial sales disputes, undoubtedly because it goes to the very
heart of the seller's contract obligation. Many conflicts involve reconciling Article 35 with related
Articles identifying the rights of buyers when sellers breach their obligations under Article 35.
[567] A variety of issues, both factual and [page 392] interpretive, arise under Article 35(1) that
govern the seller's obligation to provide goods of the "same quality, quantity and description required
by the contract."[568] The factual cases, often in courts of first instance, involve evidentiary
inquiry to identify whether there was a non-conformity and, if so, its nature,[569] whether the
buyer inspected the goods in a timely manner and gave the seller adequate notice of the non-conformity,[570] and whether the goods were adequately packaged.[571] Other cases
involve interpretation of the contract description. Since national law may vary on this, court
applications have provided insight into questions of homeward trends [572] and uniformity of
interpretation.[573]

In a 1999 case,[574] the Austrian Supreme Court heard a dispute involving wall panels that were
to be sold "ex factory" from a business in Germany to a buyer in Vienna. The panels that were
shipped were non-conforming panels, in that they were not "formatted" (cut and drilled) as agreed
in the contract. The parties agreed, by telephone, that the panels would be shipped back by the buyer.
On inspection by the seller, the panels were found to be badly damaged and useless for resale. The
seller invoiced the buyer for the value of the panels, claiming that they were not shipped correctly and
that buyer had assumed the transportation risk.

The appellate court held that the shipping of non-conforming panels constituted a delivery of non-conforming goods and a breach of contract [page 393] under Article 35 rather than a non-delivery
of goods. The significance of the distinction lay in the seller's retention of the risk of loss under CISG
Article 82(2)(a) and (b). Under the Austrian Commercial Code ("HGB") a distinction would have
been made between delivery of non-conforming goods (Falschlieferung) and non-delivery of
conforming goods (Nichtlieferung). The distinction would turn on the extent of the deviation from
the contract and on whether the incorrect delivery was subject to approval. In refraining from
applying the domestic law, the court drew the distinction based on the authoritative CISG
commentary [575] used to interpret and apply the CISG Articles. Reliance on such commentary
indicates a commitment to interpret the CISG in a manner that tends to promote uniformity of
interpretation.[576]

Resistance to homeward trend interpretations was demonstrated again in a 2001 Belgian case.
[577] In that case, the buyer sought avoidance of the obligation to pay the contract price. The
buyer framed its case on "non-conforming delivery" and "latent defects," drawing on the Belgian Civil Code for authority. Relying on existing case law [578] and authoritative commentary,[579]
the Belgian court further held the CISG alone to be applicable law and insisted that "[t]he CISG
knows only one uniform concept of conformity."[580] Within the CISG "no distinction is made
between a guarantee against latent defects and the seller's obligation to deliver. The seller must
deliver conforming goods and that is all."[581][page 394]

An example of a court's application of CISG interpretive methodology is the 2000 Italian decision
in Rheinland Versicherungen v. S.r.l. Atlarex and Allianz Subalpina S.p.A.[582] The case turned
on whether adequate and timely notice of the non-conformity was given by the buyer to the seller.
In making the determination, the court referenced CISG case law from several nations, including
Italy,[583] Germany,[584] Austria, The Netherlands,[585] United States,[586]
France,[587] and Switzerland.[588] The court recognized the non-binding nature of these
cases, pointing out that the purpose of the case analysis was not to observe binding authority but "to
assure and promote uniform enforcement of the United Nations Convention."[589] This opinion
serves as an example of using CISG interpretive methodology to advance the goal of uniformity and
discourage resort to homeward trend analysis.[590][page 395]

Article 35(2)(b) addresses the sale of goods in which the seller is aware of the particular purpose for
which the buyer will use the goods and the buyer is relying upon the seller to use skill and judgment
to provide the goods. In effect, it creates an implied warranty for a particular purpose. The implied
warranty for a particular purpose [591] has been the subject of [page 396] several court cases.
[592] Some of these cases involved simply an analysis of whether the facts constituted a failure
to conform to the contract.[593] Others, discussed below, involved legal analysis that provides
greater insight into the courts and arbitral panels interpretation of this warranty.

As is the case under Article 35(2)(a) (implied warranty of merchantability), a seller is not responsible
to conform its products to the nuances of the national law of the buyer's country. However, the seller
may be responsible for such conformity under Article 35(2)(b) (implied warranty for a particular
purpose). In a German case,[594] the issue of whether a Spanish paprika seller had to certify that
its product complied with the German Food Safety Laws demonstrates this nuance. The court found
that the seller had prior knowledge of the laws and, therefore, could not argue that it was ignorant
of the requirement that the goods comply with the German laws. The court held that since the
paprika contained more ethylene oxide than permitted under German law, the goods failed to conform
to the contract and specifically failed to meet the buyer's purpose known to the seller.[595]

The crucial factors for applying the implied warranty for a particular purpose are the buyer
communicating the intended use of the product and the seller's knowledge of the nuances of the
foreign law or standards. A Netherlands Arbitration Institute case involving a dispute concerning the
conformity of a petroleum product illustrates the intended use criterion.[596] The buyer argued
that the product contained excessive amounts of mercury, which the seller knew -- because it was in
the refining business -- would [page 397] make the product unusable to the buyer. The arbitral
tribunal concluded as a factual matter that the buyer did not expressly or impliedly indicate to the
seller the use it intended to make of the product, and that the product had other uses in the refining
industry. Thus, the panel rejected the Article 35(2)(b) claim.[597]

The panel, however, did find for the buyer on its Article 35(2)(a) claim. In doing so it reviewed
different interpretation of merchantability. It first drew on the concept of "merchantability" or
"merchantable quality," a standard of conformity found in English common law. The second
interpretation is the average quality rule found in the German, Austrian, French, and Swiss civil codes. The tribunal also found this interpretation to be unsatisfactory. Instead, the panel drew on the
history of the drafting of the CISG and its interpretive methodology. First, the panel looked to
general principles, namely, that "[i]n the interpretation of this Convention, regard is to be had to its
international character and to the need to promote uniformity in its application and the observance
of good faith in international trade."[598] Second, it attempted to find an appropriate
interpretation through the use of implied principles taken from the different Articles of the CISG.
[599]

It interpreted this mandate to suggest that neither the merchantability test nor the average quality test
should apply, based as they are in domestic notions of quality. Rather, it resorted to the history of
the CISG and the legislative history preceding its adoption. In reviewing these documents, the
tribunal became convinced that the drafters declined to articulate a standard, leaving an "open-textured" provision. In the final analysis, emphasizing the absence of alternative buyers willing to pay
the contract price for product with that level of mercury, the tribunal concluded that the goods were
not merchantable judged by any of the available interpretations.[600]

In sharp contrast, the U.S. court in Circuit Schmitz-Werke GmbH & Co. v. Rockland Industries, Inc.[601] disregarded CISG interpretive methodology and resorted to a homeward trend analysis.
The court cited only U.S. cases and ignored other national court or arbitral decisions and scholarly
commentaries on the CISG. The court expressly ignored those sources by concluding that if the
CISG is "not settled under its own terms," [page 398] then a court could resort to private
international law. It then proceeded to analyze the problem under Article 2 of the Uniform
Commercial Code.

Often times a contract is based upon a sample or model. Article 35(2)(c) requires the seller to
provide goods of equivalent quality to a sample or model upon which the contract was formed. A
Finnish court dealt with the issue of a contract based upon a sample and a seller's representation that
the product had a "shelf life" of 30 months.[603] The sample of the product tested before
delivery contained the specified vitamin content, but the product -- both on delivery and increasingly
over its life on the shelf -- deteriorated in Vitamin A content. The seller argued, pursuant to Article
35(3),[604] that buyer was aware of the Vitamin A deterioration over time and thus could not
have expected the content to remain in constant conformance with the sample for thirty months.

In deciding in favor of the buyer, the court relied not on Swiss law or trade usage but pointed instead
to the fact that the seller "must have been aware of the international content of the shelf-life concept."
[605] With respect to the seller's argument under Article 35(3), the court found it irrelevant that
the buyer knew Vitamin A deteriorated. "[I]t appears that the buyer counted on the seller's expertise
in terms of how the seller reaches the required Vitamin A content and how the required preservation
is carried out."[606] The court resisted a homeward trend solution by rejecting application of
domestic law. However, it also failed to consider the experience of other national courts in
interpreting the CISG.[607][page 399]

550. In addition, if the seller has held out a sample or a model to show the qualities of the goods,
the seller warrants that the goods possess the qualities exemplified in the model or sample. CISG,
supra note 4, at art. 35.

551. CISG, supra note 4, at art. 5(1). Professor Kazimierska traces this basic obligation to the
pacta sunt servanda of Roman law, the obligation to perform a contract "in a way that complies to
its terms, even if the performance becomes unfavorable for one of the parties or excessively difficult."
Kazimierska, Remedy of Avoidance, supra note 50, at 80.

556. The seller, however, remains liable for lack of conformity that occurs after the passage of
the risk of loss if the lack of conformity is due to "a breach of any of his obligations, including a
breach of any guarantee that for a period of time the goods will remain fit for their ordinary purpose
or for some particular purpose, or will retain specified qualities or characteristics." CISG, supra note
4, at art. 36(2).

562. While industrial property refers, most likely, to patents, the broader term "intellectual
property" suggests a broader set of rights including not only patents but also, registered designs,
copyrights, company names, trade names, trademarks, and other similar intangibles. See Enderlein
& Maskow, supra note 20, at 141.

576.See also BGH VIII ZR 51/95, Apr. 3, 1996 (F.R.G.), available at
<http://cisgw3.law.pace.edu/cases/960403g1.html> [English translation by Dr. Peter Feuerstein, translation edited by Ruth M. Janal] (last updated Sep. 2003). The German Supreme
Court held that the CISG does not differentiate between delivery of different goods and delivery of
goods that do not conform to the contract. The court noted that the CISG diverged from German
civil law on this point, citing scholarly commentary as authority.

581.Id.; But see Cass. ass. Plen., Dec. 17, 1996, D. 1997, 337 (Fr.), available at
[<http://cisgw3.law.pace.edu/cases/961217f1.html>] [English translation by Annabel Teiling, translation edited by Dr Loukas Mistelis]
(distinguishing between the application of "latent defect" in the French Civil Code and Article
31(2)(a) in such as way as to apply the homeward trend law in the face of conflicting CISG
jurisprudence). Similarly, in 2000, the Swiss Federal Supreme Court rejected "homeward trend"
attempts by the parties to impose concepts of local law in a dispute over whether a rotary printing
machine met contract specifications. Under Swiss law, issues associated with the impressions of the
buyer with respect to the quality of the goods would have been significant, or even dispositive. The
Supreme Court overturned the Court of First Instance, applied CISG Article 35(1), and relied upon
authoritative commentary for its application. Roland Schmidt GmbH c. Textil-Werke Blumenegg
[Supreme Court], 4C.296/2000/rnd Dec. 22, 2000 (Switz.), available at
<http://cisgw3.law.pace.edu/cases/001222s1.html> [English translation by Ruth M. Janal].

590. A U.S. example of the proper application of CISG interpretive methodology is Medical
Marketing International, Inc., v. Internazionale Medico Scientifica, S.R.L., 99-0380, 1999 U.S. Dist.
LEXIS 7380, at *6 (E.D. La. May 17, 1999), available at
<http://cisgw3.law.pace.edu/cases/990517u1.html>. The District Court cited a German Supreme Court
case for the proposition that Article 35 of the CISG does not require the seller to supply goods that
conform to laws and regulations in effect in the buyer's country. See Einscheidunger des BGH VIII
ZR 159/94, Mar. 8, 1995 (F.R.G.), available at <http://cisgw3.law.pace.edu/cases/950308g3.html> [English translation by Walter, Conston, Alexander & Green, P.C., editors: William M. Barron, Esq. & Birgit Kurtz, Esq.] (last
updated Dec. 2003). The German case involved the sale of New Zealand mussels by a Swiss
company to a German importer. The cadmium content of the mussels exceeded the allowable limits
under German law but was acceptable under Swiss law. The decision process under Article 35
required the court to first determine whether a violation of government regulations constitutes a
defect under Article 35(2)(a), which requires that the goods be "fit for the purposes for which goods
of the same description would ordinarily be used or whether the regulations are simply a feature of
the local environment affecting use of the goods. Since health, safety, and environmental regulations
vary dramatically from country to country, the real question -- assuming that regulations affect fitness
of purpose -- is whether it is the regulations of the seller's country or the buyer's country that affect
fitness." CISG, supra note 4, at art. 35(2)(a). The German Supreme Court held for the seller's
country, unless the buyer stipulated its own country requirements should have been met. The German
court depended heavily upon authoritative commentary to reason to this conclusion, stating:
"According to the absolutely prevailing opinion in the legal literature, which this Court follows, the
compliance with specialized public law provisions of the buyer's country or the country of use cannot
be expected." BGHZ, VIII ZR 159/94, supra note 590; see generally, Peter Schlechtriem, Case
Commentary, Conformity of the Goods and Standards Established by Public Law: Treatment of
Foreign Court Decision as Precedent, available at <http://cisgw3.law.pace.edu/cases/990517u1.html>
(last updated Dec. 2003); Andrew J. Kennedy, Recent Developments: Non-conforming Goods Under the CISG -- What's a Buyer to Do?, 16 Dick. J. Int'l L. 319 (1998). An abundant literature has
chronicled and commented upon this decision. See, e.g., Honnold, Uniform Law for International
Sales, supra note 53; Karollus, Cornell Review of the CISG (1995) 51 [Arts. 67-68] (comment on
conformity-of-the-goods ruling); Schwenzer in Schlechtriem, Commentary on the UN Convention
on the International Sale of Goods 280 (1998) [Art. 35] at n.57; Bernstein & Lookofsky,
Understanding the CISG in Europe, 2d ed. (2003), § 2-8 at n. 113 & § 4-7 at n.94. The Medical
Marketing decision is an example of the convergence in CISG interpretation based first on learned
commentary and then the integration of the thinking of the best foreign decisions on the given issue.
Courts in both Argentina and Austria came to similar results drawing upon reasoning from other
national courts' experience to produce more uniform interpretation of the CISG. See Second Instance
Court of Appeal, Apr. 24, 2000, (Arg.), available at <http://cisgw3.law.pace.edu/cases/000424a1.html>; OG 2 Ob 100/00w, Apr. 13, 2000 (Aus.) available at
<http://cisgw3.law.pace.edu/cases/000413a3.html> [English translation by Schönherr Rechtsanwälte OEG, Vienna, Austria, editor: Dr. Elke Napokoj, Esq.]. The Austrian court noted,

"[a] seller cannot be expected to know all special rules of the buyer's country or the country of
usage ... . It is rather for the buyer to observe her country's public law provisions and specify these
requirements -- either according to Art. 35(1) or (2)(b) CISG -- in the sales contract ... [t]he
requirements of the buyer's country should only be taken into account if they also apply in the seller's
country, in they are agreed on, or if they are submitted to the seller at the time of the formation of
the contract, according to Art. 35(2)(b)."

This use of uniformity principle is not without critics. See, e.g., Fletcher, Several Texts, supra note 6, arguing that the German court applied an unduly rigid standard of uniformity.

607. The other cases involving Article 35(3), which negates implied warranties if at time of the
conclusion of the contract the buyer knew of the non-conformity, tend to involve the factual question
of what the buyer knew, and when. See generally Tribunal Cantonal Valais, CI 97 167 28, Oct. 28,
1997 (Switz.), available at <http://cisgw3.law.pace.edu/cases/971028s1.html>; see also Só og
Handelsretten [Maritime Commercial Court] 31 H-0126-98, Jan. 31, 2002, supra note 341; OLG
Köln 22 U 4/96, available at <http://cisgw3.law.pace.edu/cases/960521g1.html> [English translation by Dr. Peter Feuerstein, translation edited by Chantal Niggemann]. A 1996 German case
provided an opportunity for an appellate court to place a gloss on 35(3), denying the defendant the
ability to invoke the provision where he himself had engaged in fraud. The case involved the
international sale of a late model apparently low mileage car in which the date of original sale had
been adjusted. The buyer resold the car to someone who detected the deception and exacted
damages, which the buyer sought to recover from the seller. The German court denied the seller
access to the defense that the buyer could have detected the car's lack of conformity to the contract
because the seller himself knew of the age of the car and thus behaved fraudulently. "The [seller] thus
had to reckon that the delivery of non-conforming goods would make the [buyer] liable towards his
customer." Id.

a. The provisions in the CISG on the conformity of goods to the sales contract are included
in Article 35.[1] This article is in three sections, of which the first, the conformity of the goods to the
terms of the contract, consists of the primary rule for assessing lack of conformity. Only where
the parties have not agreed otherwise will the secondary rule in Article 35(2) apply, laying down
a number of positively expressed assumptions about the contractual requirements for the goods.
Finally, Article 35(3) contains an exception to the seller's liability for some lack of conformity of
goods, where the buyer knew or could not have been unaware of the lack of conformity.

b. Unlike the CISG, the UNIDROIT Principles and the PECL cover not only sales contracts,
but also other types of contracts, e.g., contracts of service. To provide maximum flexibility, and to
facilitate future development of the two sets of principles, the fundamental rules regarding the
conformity of performance have been described in more general terms. In Article 7.1.1. of the
UNIDROIT Principles, non-performance is defined as a failure by a party to perform any of its
obligations under the contract, including defective performance or late performance. The same
approach is taken in PECL, see Article 8:101(1)[2] with comment A.[3] Although the UNIDROIT
Principles and the PECL do not have any rules which directly resemble CISG Article 35, several
articles may be used to interpret or supplement the said article. In the following paragraphs, it will
be analyzed in which manner Articles in the UNIDROIT Principles and the PECL may be used to
interpret or supplement the different parts of CISG Article 35, in particular Article 35(1), Article
35(2)(a) and Article 35(2)(b).

c. According to Article 35(1) of the Convention, the seller must deliver goods which are of the
quantity, quality and description required by the contract and which are contained or packaged in
the manner required by the contract. This provision is the primary rule on the assessment of the
conformity of goods to the contract, and it covers all kinds of defects except defects of title which
are dealt with under CISG Article 41, and defects in intellectual property rights, cf. CISG Article
42. The rule establishes that the assessment of conformity depends primarily on what the parties
have agreed. This is also emphasized by the Commentary prepared by the UNCITRAL
Secretariat, which states that the agreement between the parties is the primary source for assessing
conformity.[4] As mentioned above, the primary role of the contract is also emphasized in the
UNIDROIT Principles Article 7.1.1 and the PECL Article 8:101 with comment A.

d. Under the CISG, the establishment of the specific content of a contract is based on the
interpretation of the agreement between the parties, cf. CISG Article 8 and Article 9. Here, the
articles on interpretation in the UNIDROIT Principles chapter 4 and the PECL chapter 5 are of
relevance to interpret or supplement CISG Article 8 and Article 9, and therefore also for the
interpretation of the conformity of the goods to the contract in CISG Article 35.[5]

e. If the parties have not agreed otherwise, the secondary rule in Article 35(2) applies.
According to Article 35(2)(a) of the Convention, cf. Article 35(2), except where otherwise agreed,
goods do not conform with the contract unless they are fit for the purposes for which goods of the
same description would ordinarily be used. With these default rules, the parties do not need to
specify the purpose, as long as the goods are to be used for their ordinary purposes. This rule is
by some considered the most important rule in practice in Article 35(2),[6] expressing one of the
clearest and most fundamental rules about the seller's implied obligation to provide goods which
conform to the contract.[7] This rule is so widely accepted,[8] that Article 35(2)(a) can probably be
considered as a codification of a basic principle of international sales law.

f. In relation to Article 35(2)(a), the general assumption is that, among the ordinary
purposes of goods, that they should be capable of being resold.[9] In connection with the
purpose that goods should be capable of being resold, there is a dispute about whether, in
order to be fit for this purpose, they should be of average quality or merely of merchantable
quality, so that goods of below average quality but still merchantable may also be said to
conform to the contract.[10] During the drafting negotiations of the CISG, a Canadian proposal
that goods should be of average quality was withdrawn, since several common law countries
did not support it.[11] The practice in English law was of particular importance, as under English
law goods that were of below average quality could be considered as conforming to the
contract as long as they were merchantable.[12] As suggested by Schwenzer,[13] this argument,
which is rooted in the practice of the English courts, has been somewhat weakened since the
English Sale of Goods Act has been amended so it now requires goods to be of "satisfactory
quality", which is decided on the basis of the expectations of a reasonable buyer.[14] In
Schwenzer's opinion, this means that the two viewpoints will become closer to one another,
which seems probable.

g. In the famous Mussels case,[15] the German Federal Supreme Court declined to decide
this question, on practical grounds, since no evidence had been given as to whether the cadmium
levels in the mussels were higher than in corresponding mussels from New Zealand.[16] However,
the court did say that, even if it was assumed that the goods should be merchantable, this did not
mean that the mussels did not conform to the contract, as the seller could not be expected to know
the special public law regulations on product safety, public health, etc., in the destination State.

h. In this connection, it should be relevant to consult both the UNIDROIT Principles and the
PECL. Article 5.1.6 of the UNIDROIT Principles provides: "Where the quality of performance
is neither fixed by, nor determinable from, the contract a party is bound to render a performance
of a quality that is reasonable and not less than average in the circumstances." The relevance of this
article in the interpretation of CISG article 35(2)(a) is supported by the illustration used in the
comment to performance of average quality, which involves the sale of goods.[17] According to the
comment to performance of a quality that is reasonable, the purpose of a reasonableness test is,
that a party should not be able to perform what would be an average quality in the buyers market,
if this quality is most unsatisfactory in the market of the seller.[18] There is still no available case law
which makes use of Article 5.1.6.[19]

i. Similar provisions apply under PECL Article 6:108: "If the contract does not specify the
quality, a party must tender performance of at least average quality." In the comments to this Article
it is stressed that the various factors mentioned in the Article on reasonableness (Article 1:302)
should be taken into account when applying Article 6:108. Therefore, factors such as the normal
price for the same performance as the performance in question, the contract itself, previous dealings
between the parties, and trade usages should be taken into consideration.

j. In connection to this, the view of Bianca on Article 35(2)(a) can also be given:[20] "In the
absence of an express Convention provision it is not possible to determine once and for all the
precise degree of quality to which the buyer is entitled. It must be said, however, that the quality
can be more or less good within a tolerable degree, at least not conspicuously below the standard
reasonable expected according to the price and other circumstances." Whether goods shall be of
average quality, or of higher or lower quality will therefore usually be decided on the basis of other
factors, for example, the price of the goods.[21]

k. This view is supported by a recent arbitral award on the CISG, in which the arbitrators refused
to use either the "average quality test" or the "merchantability test".[22] Instead, the test of a
reasonable quality was used, as this was considered to be a truly uniform solution to the problem.[23]
According to the present author, this solution is in conformity with the UNIDROIT Principles
Article 5.1.6., which explicitly refers to a reasonable quality that is not less than average in the
circumstances. In this way, a rigid, mathematical average level is avoided an instead factors like
the price and expectations of the parties should be taken into consideration. The same solution
could be reached using PECL Article 6:108 with comments, although the wording of the Article
seems a bit more inflexible.

l. The conclusion is, that the Arbitral Tribunal could have supported its findings by a reference
to the UNIDROIT Principles Article 5.1.6. However, the solution in the PECL seems to favor
more the average quality test, although the corresponding comment to that provision softens this
approach considerably. At the same time, it should not be forgotten that if both parties to a sales
contract come from the same legal culture, this might indicate that the parties' reasonable
expectations[24] point towards either the "average quality test" or the "merchantable quality test",
although the supporters of the last mentioned test seems to decrease in number.

m. As stated in Article 35(2), cf. Article 35(2)(b), unless otherwise agreed by the parties,
goods do not conform with the contract unless they are fit for any particular purpose expressly or
impliedly made known to the seller at the time of the conclusion of the contract. The rule in Article
35(2)(b) can be derogated from if the circumstances show that the buyer did not rely on, or that
it was unreasonable for him to rely on, the seller's skill and judgment. Reasonableness is a general
principle of the CISG,[25] and as mentioned above, it should be relevant to consult the concepts of
reasonableness in both the UNIDROIT Principles and the PECL[26] in this connection.

n. As mentioned above, in the Mussels case, the court did say that, even if it was assumed
that the goods should be merchantable, this did not mean that the mussels did not conform to the
contract, as the seller could not be expected to know the special public law regulations on product
safety, public health, etc., in the destination State. In general, the seller should not be obliged to
deliver goods which conform with special law requirements in the buyer's country, unless other
circumstances indicate otherwise.[27] This has been confirmed in other cases, including decisions
from common law jurisdictions.[28] Furthermore, the UNIDROIT Principles Article 6.2.14(a) seems
to support this view. It follows from the said Article, that where the law of a State requires a public
permission affecting the validity of the contract or its performance and neither that law nor the
circumstances indicate otherwise, if only one party has its place of business in that State, that party
shall take the measures necessary to obtain the permission. In the comment to this article it is said,
that the term "public permission" should be given a broad interpretation, and it includes all
permission requirements established pursuant to a concern of a public nature, such as health, safety,
or particular trade policies. Thus, the findings of the German Supreme Court and later decisions
could be supported by a reference to the principle in the UNIDROIT Principles Article 6.2.14(a),
too.

o. The question of mistake and of mistaken assumptions is closely linked to the issue of
conformity of goods to the contract. According to ULIS Article 34, a buyer could not make claims
on the basis of other legal remedies in connection with the conformity of goods, which was
primarily directed against objections to validity on the basis of mistake. The prevailing view on
Article 35, in theory, is that it ought to displace or exhaust national rules on validity, cf. also the
principle of the functionally adequate solution.[29] This means that the buyer will not be able to get
around CISG Article 39 and the rules on making complaints.[30] However, this does not apply if
there is a mistake on matters other than the conformity of the goods to the contract, since then the
matter will likely be dealt with under national law.[31]

p. However, this view is resisted in some jurisdictions, where a buyer is not regarded as being
prevented from relying on the rules on validity when there is a mistake as to the characteristics of
the goods, etc. This is the prevailing view in France, Belgium, Italy, Spain, Austria and
Switzerland.[32] For example, in France and in Austria the same period is allowed for making
complaints about lack of conformity of goods to the contract under sale of goods law as for
objections under the rules on validity of contracts, which is an attempt to avoid a buyer making
objections to the validity of the contract after several years, when some mistake is identified.[33] In
Portugal, each case of complaint about lack of conformity of the goods is treated as a complaint
about a mistake, so the doctrine of lack of conformity is wholly subordinate to the doctrine of
contractual validity.[34]

q. In other jurisdictions the rules on lack of conformity must be regarded as exhaustive special
regulations, so that claims of invalidity due to mistake must be considered as excluded. For
example, this is the prevailing view in Germany,[35] while in Denmark there is de facto
disagreement,[36] and the new European Directive on consumer sales does not take a view on the
question.[37] The practice of the courts when interpreting CISG Article 35 seems to be split,
depending on which tradition is followed in national law and the factual circumstances of the case.[38]

r. Altogether, the conclusion must be that courts may be expected to reach divergent
decisions, depending on the legal tradition of the jurisdiction in question, and the extent to which
a dynamic or a restrictive approach is used. However, there seems to be a development towards
acknowledging the primacy of Article 35, even in jurisdictions which have traditionally used a
restrictive interpretation, cf. the decision of the Austrian Supreme Court of 13 April 2000.[39]

s. This development could be supported by a reference to the UNIDROIT Principles Article 3.7,
which maintains the principle of the exhaustion of rights: "A party is not entitled to avoid the
contract on the ground of mistake if the circumstances on which that party relies afford, or could
have afforded, a remedy for non-performance." In the Commentary on this article,[40] the following
example (mutual mistake)[41] is given of the application of this rule: "A, a farmer, who finds a rusty
cup on the land sells it to B, an art dealer, for 100,000 Austrian schillings. The high price is based
on the assumption of both parties that the cup is made of silver (other silver objects had previously
been found on the land). It subsequently turns out that that the object in question is an ordinary iron
cup worth only 1,000 schillings. B refuses to accept and to pay for it on the ground that it lacks the
assumed quality. B also avoids the contract on the ground of mistake as to the quality of the cup.
B is entitled only to the remedies for non-performance."

t. However, according to PECL Article 4:119, a party which is entitled to a remedy under the
validity chapter in circumstances which afford that party a remedy for non-performance may pursue
either remedy. This reveals a striking difference between the solutions given in the UNIDROIT
Principles and the PECL.

u. Neither the UNIDROIT Principles nor the PECL seems to contain any provisions which might
help in interpreting or supplement the rest of CISG Article 35, (Art. 35(2)(b)-(d) (the conformity
of goods according to special purpose, sample or model and the packaging of the goods) or CISG
Article 35(3) (the buyer's knowledge of the non-conformity)), although the general rules on the
interpretation of the contract in the UNIDROIT Principles and the PECL still have to be taken into
consideration, cf. para d. above.

FOOTNOTES

* Assistant professor (Law of Obligations), Aarhus School of Business. The author expresses his sincere
thanks to Professor Albert Kritzer, Executive Secretary of the Institute of International
Commercial Law, Pace University School of Law, Dr. John Felemegas, Lecturer, Faculty of Law, University of Technology, Sydney, and Associate Professor Hans Henrik Edlund,
Aarhus School of Business, for reviewing a prior version of this Article.

2. Article 8.101(1) states: "Whenever a party does not perform an obligation under the contract and the non-performance is not excused under Article 8:108, the aggrieved party may resort to any of the remedies set
out in chapter 9." See Lando, O. & Beale, H., The Principles of European Contract Law. Parts I and II.
Combined and Revised (Hague, 2000), Article 8:101.

3. See Lando, O. & Beale, H., op. cit., in comment A: "Under the system adopted by the Principles there is
non-performance whenever a party does not perform any obligation under the contract. The non-performance may consist in a defective performance or in a failure to perform at the time performance is due,
be it a performance which is effected to early, too late or never" (the second sentence is omitted by this
author).

4. See Honnold, J.O., Documentary History of the 1980 Uniform Law for International Sales (Deventer,
1989): Secretariat Commentary to Article 35(1) (Section 33(1) of the Commentary): "Paragraph (1) states the
standards by which the seller's obligation to deliver goods which conform to the contract is measured. The
first sentence emphasizes that the goods must conform to the quantity, quality and description required by
the contract and must be contained or packaged in the manner required by the contract. This provision
recognizes that the overriding source for the standard of conformity is the contract between the parties.
The remainder of paragraph (1) describes specific aspects of the seller's obligations as to conformity which
apply except where otherwise agreed." Comment 4. The Secretariat Commentary is also available online at
<http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-35.html>.

5. For an analysis of the connection between Article 35 and Articles 8 and 9, see Henschel, R.F., Conformity
of Goods in International Sales. An analysis of article 35 in the United Nations Convention on the
International Sale of Goods (CISG), chapter 3.

17. In the Commentary to UNIDROIT Principles 2004 the following example is given at p. 136: "A buys 500
kgs. of oranges from B. If the contract says nothing more precise, and no other circumstances call for a
different solution, those oranges may not be of less than average quality. Average quality will however
suffice unless it is unreasonable defective."

18. Cf. the Commentary to Article 5.1.6 of the UNIDROIT Principles 2004, at p. 137: "A company based in
country X organises a banquet to celebrate its 50th anniversary. Since the cuisine in country X is mediocre,
the company orders the meal from a renowned restaurant in Paris. In these circumstances the quality of the
food provided must not be less than the average standards of the Parisian restaurant; it would clearly not
be sufficient simply to meet the average standards of country X." One may assume that in such cases the
price will often be decisive.

[117] "On the basis of the arguments above, the Tribunal holds that neither the merchantability test nor the
average quality test are to be used in CISG cases and that the reasonable quality standard referred to above
(see No. 71) is to be preferred."

[118] "The choice in favour of a test of reasonable quality is supported by the authors and the case cited
above in No. 71 as well as by those scholarly writings that have rejected the average quality test. It is
compatible with the travaux préparatoires since the Canadian amendment does not exclude an interpretation
in favour of reasonable quality since it provided that under article 35(2)(a) CISG goods are fit for their
ordinary use if it is reasonable to expect a certain quality having regard to price and all other relevant
circumstances. Also, any such interpretation complies with article 7(1) CISG imposing to take into account
the international character of CISG and its reluctance to rely immediately on notions based on domestic law.
Furthermore, the interpretation preferred by the Arbitral Tribunal is consistent with article 7(2) CISG, which
primarily refers to the general principles of CISG as possible gap fillers. In this respect, it may be noted that
CISG often uses open-textured provisions referring to reasonableness (e.g., articles 8, 18, 25, 33, 34, 37, 38,
39, 43, 44, 46, 48, 49, 65, 72, 75, 77, 79, 86, 87 and 88). Finally, even if one were to rely on domestic law by
virtue of article 7(2) CISG, Dutch law would be applicable and would also impose a standard of reasonable
quality."

27. Whether the decision would have been different if, for example, the seller knew of the public health
regulations in the buyer's state, or if the buyer could have assumed that the seller either knew or ought to
have known of these regulations, perhaps because

(i) the seller had a branch in the buyer's State,
(ii) the parties had had a long-term trading arrangement,
(iii) the seller had regularly exported to the buyer's State, or
(iv) the seller had marketed his goods in the buyer's State,

was according to the German Supreme Court irrelevant in this case, as the buyer had not
asserted any of these circumstances. Compare with CISG Article 42 on industrial property or
other intellectual property.

30. Compare with Flesch, K., op. cit., p. 151 et seq., where, by referring to the two-year rule in Article 39 as a
general principle, cf. Article 7(2), it is argued that there is no scope for national rules on validity of contracts
which obviate this Convention principle. This is indeed a dynamic interpretation of the Convention which
not everybody (including the present writer) will support.